Bangko Sentral ng Pilipinas Governor Benjamin Diokno said net inflow of foreign direct investments this year could exceed $10 billion once the proposed Corporate Income Tax and Incentives Rationalization Act or CITIRA bill is passed into law.
The BSP, based on updated projections in November, expects the FDI to post a net inflow of $8.8 billion in 2020. But Diokno is optimistic that number could be surpassed once CITIRA is passed into law.
“Our estimate is around $8 billion… but that is early in the game because if CITIRA is approved into law, it could exceed $10 billion,” Diokno said at the sidelines of the Bankers’ Night held at the BSP on Friday. The CITIRA bill aims to rationalize fiscal incentives.
“… There are only a few countries that you want to invest [in] right now. The Philippines is one,” Diokno said.
Latest BSP data showed net inflow of foreign direct investments in October rose 33.7 percent to a six-month high of $672 million from $502 million a year ago. The increase was mainly due to the expansion in non-residents’ net investments in debt instruments issued by local affiliates by 60 percent to $534 million from $334 million in 2018.
Net inflows of equity capital, meanwhile, slowed down to $58 million from $98 million in October 2018, following the decline in equity capital placements coupled with the increase in withdrawals.
Equity capital infusions during the month came from the United States, South Korea and Japan. These were invested in real estate, financial and insurance, and manufacturing.
The latest figures brought the net FDI in the first 10 months to $5.8 billion, lower by 32.8 percent from $8.6 billion a year ago.
“The lower FDI net inflows reflect subdued investor sentiment due to the continued sluggish global economic activity,” the BSP said.
The top country sources of equity capital placements in the 10-month period were Japan, the US, Singapore, China and South Korea. These were invested in financial and insurance, real estate and manufacturing.
The BSP in November revised downward the net FDI projection in 2019 to $6.8 billion from the earlier target of $9 billion, taking into account the latest global developments.